Profit attributable to ordinary shareholders
During 2013, the Group achieved a profit attributable to ordinary shareholders of HK$7,588 million, representing an increase of 9% year-on-year. Profit from underlying business operations was HK$4,901 million, 42% above 2012. Special steel improved significantly as a result of a higher profit margin and the acquisition of the additional 25% interest in Xingcheng Phase II. The energy sector also recorded outstanding performance, increasing its attributable profit by 60%, due to more electricity sold by Ligang power station and lower coal prices. These satisfactory results were partially offset by a loss of HK$1.6 billion in the iron ore business, largely represented by the interest expense associated with the assets now ready for operation.
Earnings per Share and Dividends
Earnings per share for profit attributable to ordinary shareholders were HK$2.08 in 2013 compared with HK$1.91 in 2012, an increase of 9%. The number of shares outstanding was 3,649,444,160 on both 31 December 2012 and 2013.
A final dividend of HK$0.25 per share will be recommended to ordinary shareholders for approval at the annual general meeting. Together with the interim dividend of HK$0.10 per share paid in September 2013, the total ordinary dividend will be HK$0.35 per share, compared with HK$0.45 for the previous year. This equates to an aggregate cash distribution of HK$1,277 million.
Attributable Profit / (Loss) and Assets by Business
Attributable Profit / (Loss) by Business
Special Steel: The underlying operating attributable profit for 2013 improved against the previous year. Despite a reduction of 7% in the overall price of our products for 2013 as compared with 2012, the margin was enhanced by a lower cost of major raw materials utilised in production. A total of 7.24 million tonnes of special steel products were sold during the year, 11% more than the previous year. In addition, the operating results were HK$160 million higher than the previous year due to the increase of our shareholding in Xingcheng Phase II to 100%.
Iron Ore: The attributable loss in 2013 was HK$838 million higher than the previous year, reflecting an increase in loan interest associated with equipment now completed, as well as a HK$381 million impairment loss provision mainly due to the cancellation of construction of a pellet plant for the mining project. For the purpose of segment analysis, iron ore includes the mining operation in Western Australia, the 12 mini-cape vessels intended to carry the mine’s iron ore, and a trading and ship management business in Singapore.
Mainland China Property: Higher net attributable profit for 2013 was due primarily to the sale of CITIC Plaza Shenhong in the second half. This was partially offset by fewer properties handed over in the Shanghai Lu Jia Zui development as compared with the previous year. While sales of properties were excellent in 2013, the profit will not be recognised until delivery in later years. Deliveries in Shanghai fell but this was compensated partially by Hainan project Phase II (the Starbury) and III (the Yard of Islands) during 2013. The leasing business was comparatively steady, with occupancy rates of our investment properties at approximately 88% on 31 December 2013, which was remaining comparable with preceding years.
Hong Kong Property: Earnings from the leasing business benefited from the rising rental and occupancy rates of our investment properties in Hong Kong. For property development, an operating loss was shared from our associated company, Hong Kong Resorts, during 2013, due to a charge related to common facilities at Discovery Bay. This was partially compensated by earnings on the sales recognised, which were lower than the previous year when fewer properties were handed over.
Energy: The increase in the Energy division’s attributable profit was contributed by the lower price of coal and more units of electricity sold in the power generation business as compared with the previous year. Lower earnings from the coal mine in Shandong were mainly due to a drop in coal prices, despite increases in sales volume and coal production.
Tunnels: Higher earnings were mainly attributable to the increase in Western Harbour Tunnel’s toll rates, which went into effect on 1 January 2013. Both tunnels also saw growth in market share and volume of traffic between Hong Kong and Kowloon as compared with the previous year. Average daily traffic through the two tunnels increased 2%.
Dah Chong Hong : The 8% decrease in our share of attributable profit was mainly due to a 41% reduction in segment profit from the China motor business upon discontinuation of the Bentley distributorship in the PRC at the end of 2012. However, the motor business in Hong Kong and Macau remained robust with a 59% increment in segment profit due to increased sales of commercial vehicles and strong sales growth in new passenger vehicle models. The motor business in other markets also turned around with an increase in attributable profit from the Isuzu business in Singapore and Taiwan. The food and consumer products business also outperformed the previous year as both sales of fast moving consumer goods and the attributable profit from the upstream food processing business increased.
CITIC Telecom : The increase in the attributable profit was mainly due to the first time consolidation of a 99% equity interest in Companhia de Telecomunicações de Macau, S.A.R.L. (“CTM”) and the gain resulting from the accounting treatment on the increase in equity interest from 20% to 99% in CTM, partially offset by exceptional items including the related transaction costs, special provisions and impairment on investments and share option expenses. Our share of CITIC Telecom’s results declined after the reduction in our interest from 61% to 42% in February 2013.
Gain on Disposal of Assets : One-off gains of HK$2,511 million for 2013 included the following items:
- an amount of HK$2,055 million which comprised a disposal gain of an 18.6% interest in CITIC Telecom and a fair value gain on our remaining shares;
- an amount of HK$362 million of negative goodwill recognised following our acquisition of a 25% interest in Xingcheng Phase II and a fair value gain on our existing shares in the business immediately after the acquisition; and
- an amount of HK$94 million out of the dilution of our interest in a steel plant in Wuxi from 100% to 50%
The gain in 2012 was made from the sale of our entire interest in CITIC Guoan and properties at Tai Chi Factory Building in Hong Kong.
Change in the Fair Value of Investment Properties: The fair value of investment properties increased by HK$1,652 million in 2013. This was due to an upward revaluation of investment properties of CITIC Pacific in both mainland China and Hong Kong.
Others: These are mainly net unallocated finance charges and the profit attributable to holders of perpetual capital securities.